ICO — Investments based on decentralized trust
The 2017 has been a very good year for ICO world and the beginning of 2018 has the potential to overcome the performance reached last year.
“Investment in ICO for the full year 2017 generated an median ROI of 116.63%. The median amount of funds raised per projects staging their ICOs in 2017 was $1,720,000. The total amount of funds raised by ICOs in the past year was $6,184,529,460”
“The investment democratization process, extend the audience, allowing entrepreneurs to bypass the complexity and all the rules of a VC round, thought the token users direct interaction.”
A new ecosystem is created to support all requirements of this new frontier cloning regulated market logic approch.
So let’s try to understand the main actors’ role.
ICO website : all the informations about the project are well designed and stored in a single page website . A white-paper exposes story and numbers to support the vision with a super efficient and skilled team. A futuristic counter has the responsibility to show, how close the finish line is.
ICO agency : promote an ICO isn’t simple. Google is a good support to research the most performing agencies in term of results. The services offered and the list of successful live and closed projects, are the best business card to convince you, about their strong competence and a rich “cachet” is required to start the engine.
Listing and rating : having a top position on a listing ICO website and a good review is fundamental due the complexity of verifing all data showed by project owners. So these websites helps users to understand what the ICOs risk is and the “experts sentiment”.
Socials : the project promoters communication is guaranted by social channels. Telegram plays the role of lead channel, bounty, airdrops, advisors and influencers posts, affect the risk perception, promoting a gold rush with only one purpose: receive its slice.
The result is the transformation of the members involved, as an indicator of the interest generated by the ICO and indirectly as un indicator of expected investment return.
But something is changing.
As illustrated by this chart above the number of completed ICO is fallen down, losing more than 80%.
In clear water you catch no fish
Having participated to a numerous crypto events, the most frequent expression I heard, associated to project descriptions has always been “blockchain is transparent” and “blockchain is secure”.
The result ended up be a shifting of the main features of a technology into an investment operation, basically, in this case, from blockchain to ICO.
So I decided to carry out some checks.
I started from one of the agencies showed above, in order to understand more details their services and using LinkedIn I’ve tried to contact someone of the marketing & sales department but I did not get any results, so I decided to use their website contact form.
After a couple of day, I’ve received an email asking to arrange a skype call. Nobody replied to my LinkedIn requests.
With pages full of numbers describing the success reached by their campaigns, you have the sensation to be able to leverage the proven knowledge and to be in the right hands.
So I decided to take a tour of some of the campaigns declared as “live”.
The first I started to monitor, has increased the raised fund, passing from $700k to $5ml in a month !
That’s a real great result, I thought !! I went ahead and I decided to sign-in and complete the whitelisting or kyc to get the smart contract address.
I was really surprised once completed the sign-in form, to see the page below
Basically they ask you to send your ETH not to a smart contract but to a wallet generated on the fly.
Well, but how can I verify if they really raised 5 million dollars ?? The answer is simple. Let’s try to get some information from their telegram group with more than 3000 members.
The answer is really simple : send your ETH to the address we showed…. as soon as the smart contract will be developed, you will be able to verify everything ;)
Basically the transparency offered by a smart contract, that allow you to verify how many ETH and from which address have been sent, become an optional.
So how can I trust them ? I’m a bit surprised so I decided to verify their rating and what the expert is saying.
Summing up: No MVP, No Kyc, No Whitelisting, No SmartContract, No support, No transparency, but 5ml raised. After all, what is really frightening, is not even the initiative itself, but the the ecosystem supporting it.
You know what? I had the same sensation when I received an email reporting about a dead relative, that left me 10M $ ;)
The exercise continued with another agency and others 2 projects achieving the same result, defining a scenario without transparency and security, which opens the door to fraudulent behaviors.
“Send your ETH to the address and you will contact me to say thank you”
As S&P taught : this is my opinion.
by the author.